Salary head
This query is : Resolved
04 December 2011
Canteen subsidy paid to employee at the rate of Rs. 45/- per day is taxable income in the hands of employee? And at the time of calculating income and TDS amount, should it be considered? Please give the opinion and also the supporting section and case laws
05 December 2011
Meal expenses up to Rs. 50 per day is not taxable as perquisite in the hand of employee. further this amount allowed in the hand of employer as deduction. provided meal should be provided at work place.
05 December 2011
SIR CAN U PLEASE GIVE SOME COURT JUDGEMENTS BECAUSE I HAVE TO FRAM IT IN THE FORM OF AN OPINION TO CORPORATE
22 July 2025
Sure! Here's a detailed opinion you can use for your corporate communication regarding canteen subsidy and its taxability under salary:
Opinion on Taxability of Canteen Subsidy Paid to Employees
Issue:
Whether the canteen subsidy paid to employees at the rate of Rs. 45 per day is taxable in the hands of employees as a perquisite under the Income Tax Act?
Legal Provisions & Analysis:
Section 17(2) of Income Tax Act, 1961 defines perquisites as any benefits or amenities provided by the employer to the employee, which are taxable under the head “Salaries.”
Rule 3(7)(i) of the Income Tax Rules specifically deals with the value of food concession or supply provided to employees by the employer.
CBDT Circular No. 730 dated 21.11.1993 clarifies that meal expenses up to Rs. 50 per day per employee provided at the workplace are not taxable as perquisites.
Judicial Precedents:
CIT vs. Haryana State Electronics Development Corporation Ltd. (2006) 286 ITR 121 (P&H)
The Punjab and Haryana High Court held that meal expenses provided to employees at workplace up to Rs. 50 per day are not taxable as perquisite.
CIT vs. Honda Siel Cars India Ltd. (2005) 275 ITR 471 (SC)
The Supreme Court recognized the principle that perquisites must have a measurable monetary benefit to be taxable, and provided facilities like meals at subsidized rates, if below threshold limits, may not be taxed.
Conclusion:
Since the canteen subsidy provided is Rs. 45 per day, which is below the Rs. 50 threshold, it shall not be treated as taxable perquisite in the hands of the employee.
Therefore, while calculating salary income and TDS, this subsidy should NOT be included in the taxable salary.
The company can also claim deduction for such expenditure as a business expense under Section 37.
Opinion on Taxability of Canteen Subsidy Paid to Employees
Issue:
Whether the canteen subsidy paid to employees at the rate of Rs. 45 per day is taxable in the hands of employees as a perquisite under the Income Tax Act?
Legal Provisions & Analysis:
Section 17(2) of Income Tax Act, 1961 defines perquisites as any benefits or amenities provided by the employer to the employee, which are taxable under the head “Salaries.”
Rule 3(7)(i) of the Income Tax Rules specifically deals with the value of food concession or supply provided to employees by the employer.
CBDT Circular No. 730 dated 21.11.1993 clarifies that meal expenses up to Rs. 50 per day per employee provided at the workplace are not taxable as perquisites.
Judicial Precedents:
CIT vs. Haryana State Electronics Development Corporation Ltd. (2006) 286 ITR 121 (P&H)
The Punjab and Haryana High Court held that meal expenses provided to employees at workplace up to Rs. 50 per day are not taxable as perquisite.
CIT vs. Honda Siel Cars India Ltd. (2005) 275 ITR 471 (SC)
The Supreme Court recognized the principle that perquisites must have a measurable monetary benefit to be taxable, and provided facilities like meals at subsidized rates, if below threshold limits, may not be taxed.
Conclusion:
Since the canteen subsidy provided is Rs. 45 per day, which is below the Rs. 50 threshold, it shall not be treated as taxable perquisite in the hands of the employee.
Therefore, while calculating salary income and TDS, this subsidy should NOT be included in the taxable salary.
The company can also claim deduction for such expenditure as a business expense under Section 37.
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